Trump has vowed sweeping protectionist measures, including the establishment of an "External Revenue Service" to impose universal tariffs of 10 to 20 percent on imports and punitive tariffs of up to 60 percent on Chinese goods. These actions threaten to disrupt South Korea’s export-driven economy, which heavily depends on global trade.
The Korea Institute for International Economic Policy (KIEP) predicts that such tariffs could slash South Korean exports by as much as $44.8 billion.
The Bank of Korea's Foreign Investment Management Office offers a less dire but still concerning projection, estimating that Chinese tariffs might increase from the current 11 percent to between 30 and 40 percent, potentially hitting semiconductors, capital goods, and consumer products.
Some experts fear Trump may use tariffs as leverage to press South Korea on military cost-sharing for U.S. troops stationed on the Korean Peninsula.
Trump’s trade policies are already casting a shadow over global markets. The International Monetary Fund (IMF) recently downgraded its global trade growth forecast for 2025 to 3.2 percent from 3.4 percent, citing escalating protectionism.
Adding to South Korea’s challenges, the won has weakened sharply in recent weeks, nearing 1,500 to the U.S. dollar. The Korean currency has been battered by a combination of domestic political instability and a strong global dollar.
Bank of Korea Governor Rhee Chang-yong attributed the depreciation to global dollar strength and the ripple effects of martial law decree by President Yoon Suk Yeol.
"The market uncertainty is heightened as we cannot anticipate what Trump might say during his inauguration," said Seo Jung-hoon, a senior researcher at Hana Bank. "The upward pressure on the won-dollar exchange rate appears to outweigh downward pressure."
South Korea's political and economic response has been constrained by its vacant presidency, with Acting President Choi Sang-mok managing interim measures to stabilize financial markets.
The government has appointed former Minister of Knowledge Economy Choi Jong-gu and former Financial Services Commission Chairman Choi Jung-kyung as ambassadors to manage international financial and investment cooperation.
Foreign Minister Cho Tae-yul acknowledged the limitations of the country’s diplomacy, saying, "Our efforts are essentially tied down by unprecedented domestic political conflict."
Analysts suggest that South Korea may have a narrow window to prepare, as Trump’s immediate priorities appear focused elsewhere. "Trump has put forward significant issues such as acquiring Greenland from Denmark, addressing NATO concerns, and securing control of the Panama Canal," said Song Young-kwan, a senior fellow at the Korea Development Institute.
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